GBPUSD has steadied at 1.2550 following Tuesday’s severe plunge.
GBPUSD fell below 1.2530, its lowest level since mid-June, before completing the day at 1.2550 on Tuesday. The pair steadied at that level early Wednesday. But the risk-averse market environment implies that a steady rebound may be difficult to achieve.
GBPUSD Investors are growing increasingly apprehensive about a global economic downturn. Owing to continued problems in China’s economy and the possible impact of rising oil costs on inflation. The FTSE 100 in the United Kingdom began in the red on Wednesday. And was last seen losing about 1%.on that particular day, reflecting the gloomy tone. Furthermore, at the time of publication. US stock index futures were down between 0.2% and 0.4%.
Early Wednesday, safe-haven flows continued to dominate the markets.
Unless there is a significant change in risk sentiment in the second part of the day, the US Dollar may maintain its strength and limit GBPUSD’s recovery efforts.
Later in the session, the ISM will issue the August Services PMI survey. Investors anticipate a headline PMI of 52.5, slightly lower than the July reading of 52.7. A favorable surprise might provide the USD a lift by attracting bets on another 25 basis point Federal Reserve rate hike before the end of the year. A reading below 50, on the other hand, may have the opposite effect. impact the currency’s worth.
Nonetheless, risk perception may continue to be the dominant driver of GBPUSD movement beyond an early reaction to the PMI report.
GBPUSD Technical Outlook
The pivot point for GBPUSD is 1.2560 (the midpoint of the descending regression channel). If the pair can hold above that level and reaffirms its support. It may rebound to 1.2600 (psychological level) and 1.2630 (static level, 50-period Simple Moving Average (SMA). Upper limit of the declining channel).
On the downside, interim static support appears to have developed at 1.2540, ahead of 1.2500 (psychological threshold) and 1.2480 (descending channel lower limit).
